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Zeman signs controversial bill on budget responsibility

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Prague, Jan 23 (CTK) – Czech President Milos Zeman signed into law yesterday a controversial bill on the budget responsibility rules, which introduces instruments against public budgets falling into debt, his spokesman Jiri Ovcacek has told CTK.
Senators criticised the bill, saying it interferes in the municipalities’ constitutional right concerning their financial management. They have said they will file a complaint with the Constitutional Court (US).
According to the law, the government and other offices will have to take remedial measures if the debt of public budgets crosses 55 percent of GDP.
The government would have to submit draft state budgets leading to a long-term sustainable state of public finances, while municipalities and other institutions would have to have minimally balanced budgets.
If public finances fell into a debt amounting to more than 60 percent of GDP, the government would propose ways of lowering it.
The bill only sets more specific duties for municipalities and regions if their debt crosses the barrier. If they failed to decrease their debt, they would lose their share of the tax yield.
Measures against the excessive indebtedness of the state were to be originally embodied in a constitutional law on budget responsibility.
Because of disagreement within the government coalition, the Chamber of Deputies only passed a regular bill.
It is precisely this that the Senate says is anti-constitutional in relation to the municipalities.
The Senate vetoed the bill.
Prime Minister Bohuslav Sobotka (Social Democrats, CSSD) said previously after a meeting of the leaders of the government coalition parties that the Finance Ministry should draft an amendment that would react to the objections.
Finance Minister Andrej Babis (ANO) said, however, he does not share the fears of the bill being anti-constitutional.
The fulfilment of the fiscal rules will be assessed by a new budget council according to the law.
The law will probably take effect in February and the measures concerning self-rule authorities are to take effect next year.

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